Question 1

Use this information to answer the following question. $\begin{array}{|l|r|r|}\hline \text { Account Name } & \text { Debit } & \text { Credit } \
\hline \text { Sales } & & 303,000 \
\text { Sales Returns and Allowances } & 10,000 & \
\text { Purchases } & 68,000 & \\text { Purchases Returns and Allowances } & & 8,000 \
\text { Freight-In } & 12,000 & \
\text { Selling Expenses } & 30,000 & \
\text { General and Administrative Expenses } & 110,000 & \
\hline
\end{array}$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Net sales for the period were

Accepted Answer

Net sales are calculated by subtracting sales returns and allowances from total sales. Thus, $303,000 (Sales) - $10,000 (Sales Returns and Allowances) = $293,000.

Question 2

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows:
$\begin{array}{lr}
\text { Advertising Expense } & 14,000 \
\text { Common Stock } & 100,000 \
\text { Dividends } & 21,000 \
\text { Freight-In } & 7,000 \
\text { Freight-Out Expense } & 10,000 \
\text { Interest Income } & 24,000 \
\text { Merchandise Inventory (Jan. 1) } & 58,000 \
\text { Merchandise Inventory (Dec. 31) } & 56,000 \
\text { Purchases } & 60,000 \
\text { Purchases Returns and Allowances } & 4,000 \
\text { Rent Expense } & 9,000 \
\text { Retained Earnings } & 40,000 \
\text { Sales } & 150,000 \
\text { Sales Returns and Allowances } & 19,000 \
\text { Wages Expense } & 32,000
\end{array}$ Goods available for sale would appear on the income statement as

Accepted Answer

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Question 3

Feathertouch Company sold merchandize worth $800 on credit,terms n/15.The merchandize sold had cost $550.What is the required journal entry to record the transaction under the perpetual inventory system?

Accepted Answer

The correct journal entry under the perpetual inventory system records the sale and the cost of goods sold. Accounts Receivables is debited and Sales is credited for the sale amount. Cost of Goods Sold is debited and Merchandize Inventory is credited for the cost of the goods sold.

Question 4

Use this information to answer the following question. $\begin{array}{|l|r|r|}\hline \text { Account Name } & \text { Debit } & \text { Credit } \
\hline \text { Sales } & & 300,000 \
\text { Sales Returns and Allowances } & 10,000 & \
\text { Purchases } & 62,000 & \\text { Purchases Returns and Allowances } & & 8,000 \
\text { Freight-In } & 12,000 & \
\text { Selling Expenses } & 30,000 & \
\text { General and Administrative Expenses } & 110,000 & \
\hline
\end{array}$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Cost of goods sold for the period was

Accepted Answer

Cost of goods sold = Beginning inventory + Purchases - Purchases returns and allowances - Ending inventory= 22,000 + 62,000 - 8,000 - 14,000= $74,000

Question 5

The amount of goods available for sale during the year depends on the amounts of

Accepted Answer

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Question 6

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

Accepted Answer

When a company records a sales return under the perpetual inventory system, it increases Merchandise Inventory and decreases Cost of Goods Sold to reflect the return of goods to inventory and the reversal of the cost associated with the sale.

Question 7

Use this information to answer the following question. $\begin{array}{|l|r|r|}\hline \text { Account Name } & \text { Debit } & \text { Credit } \
\hline \text { Sales } & & 300,000 \
\text { Sales Returns and Allowances } & 10,000 & \
\text { Purchases } & 68,000 & \\text { Purchases Returns and Allowances } & & 8,000 \
\text { Freight-In } & 12,000 & \
\text { Selling Expenses } & 30,000 & \
\text { General and Administrative Expenses } & 110,000 & \
\hline
\end{array}$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

Accepted Answer

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Question 8

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows:
$\begin{array}{lr}
\text { Advertising Expense } & 14,000 \
\text { Common Stock } & 100,000 \
\text { Dividends } & 21,000 \
\text { Freight-In } & 7,000 \
\text { Freight-Out Expense } & 10,000 \
\text { Interest Income } & 24,000 \
\text { Merchandise Inventory (Jan. 1) } & 70,000 \
\text { Merchandise Inventory (Dec. 31) } & 56,000 \
\text { Purchases } & 60,000 \
\text { Purchases Returns and Allowances } & 4,000 \
\text { Rent Expense } & 9,000 \
\text { Retained Earnings } & 40,000 \
\text { Sales } & 151,000 \
\text { Sales Returns and Allowances } & 19,000 \
\text { Wages Expense } & 32,000
\end{array}$ Gross margin from sales would be

Accepted Answer

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Question 9

Use this information to answer the following question. $\begin{array}{|l|r|r|}\hline \text { Account Name } & \text { Debit } & \text { Credit } \
\hline \text { Sales } & & 319,000 \
\text { Sales Returns and Allowances } & 10,000 & \
\text { Purchases } & 68,000 & \\text { Purchases Returns and Allowances } & & 8,000 \
\text { Freight-In } & 12,000 & \
\text { Selling Expenses } & 30,000 & \
\text { General and Administrative Expenses } & 110,000 & \
\hline
\end{array}$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Income before income taxes for the period was

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Question 10

Assume a company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000,purchases of $75,000,and sales of $125,000.The company closes its records once a year on December 31.In the accounting records,the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was

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Question 11

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Accepted Answer

Under the perpetual inventory system, when a purchase return occurs, the Merchandise Inventory account is credited to reduce the inventory balance because the goods are no longer in inventory.

Question 12

Use this information to answer the following question. $\begin{array}{|l|r|r|}\hline \text { Account Name } & \text { Debit } & \text { Credit } \
\hline \text { Sales } & & 300,000 \
\text { Sales Returns and Allowances } & 10,000 & \
\text { Purchases } & 53,000 & \\text { Purchases Returns and Allowances } & & 8,000 \
\text { Freight-In } & 12,000 & \
\text { Selling Expenses } & 30,000 & \
\text { General and Administrative Expenses } & 110,000 & \
\hline
\end{array}$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Net cost of purchases for the period were

Accepted Answer

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Question 13

Assuming that net cost of purchases was $58,000 during the year and that ending merchandise inventory was $1,000 less than the beginning merchandise inventory of $12,500,how much was cost of goods sold?

Accepted Answer

Cost of Goods Sold (COGS) is calculated as: Beginning Inventory + Purchases - Ending Inventory. Here, Beginning Inventory is $12,500, Purchases are $58,000, and Ending Inventory is $11,500 ($12,500 - $1,000). So, COGS = $12,500 + $58,000 - $11,500 = $59,000.

Question 14

Which of the following is necessary for computing cost of goods sold but not necessary for computing goods available for sale?

Accepted Answer

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Question 15

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows:
$\begin{array}{lr}
\text { Advertising Expense } & 14,000 \
\text { Common Stock } & 100,000 \
\text { Dividends } & 21,000 \
\text { Freight-In } & 7,000 \
\text { Freight-Out Expense } & 10,000 \
\text { Interest Income } & 24,000 \
\text { Merchandise Inventory (Jan. 1) } & 70,000 \
\text { Merchandise Inventory (Dec. 31) } & 56,000 \
\text { Purchases } & 60,000 \
\text { Purchases Returns and Allowances } & 4,000 \
\text { Rent Expense } & 9,000 \
\text { Retained Earnings } & 40,000 \
\text { Sales } & 150,000 \
\text { Sales Returns and Allowances } & 19,000 \
\text { Wages Expense } & 32,000
\end{array}$ The amount of net sales on the income statement would be

Accepted Answer

Net sales are calculated as Sales minus Sales Returns and Allowances. Therefore, $150,000 - $19,000 = $131,000.

Question 16

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

Accepted Answer

The answer of Chancellor Company purchased merchandize worth $900 on...

Question 17

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the perpetual inventory system?

Accepted Answer

Under the perpetual inventory system, purchases of merchandise are recorded by debiting Merchandise Inventory and crediting Accounts Payable.

Question 18

Feathertouch Company sold merchandize worth $800 on credit,terms n/15 and on the next day the customer returned merchandize worth $50,which cost $30 for Feathertouch company.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

Accepted Answer

The answer of Feathertouch Company sold merchandize worth $800 on...

Question 19

Which of the following is not considered in computing net cost of purchases?

Accepted Answer

Freight-out expenses are transportation costs for goods sold by the company, and are not related to the purchase of inventory. Therefore, they are not considered in computing net cost of purchases. The other options listed are all relevant in computing net cost of purchases.

Question 20

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

Accepted Answer

Under the perpetual inventory system, returns of merchandise are recorded by debiting Accounts Payable and crediting Merchandise Inventory to reflect the decrease in inventory.

Quiz 5: The Operating Cycle and Merchandising Operations

Feathertouch Company sold merchandize worth $800 on credit,terms n/15.The merchandize sold had cost $550.What is the required journal entry to record the transaction under the perpetual inventory system?

The amount of goods available for sale during the year depends on the amounts of

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Assuming that net cost of purchases was $58,000 during the year and that ending merchandise inventory was $1,000 less than the beginning merchandise inventory of $12,500,how much was cost of goods sold?

Which of the following is necessary for computing cost of goods sold but not necessary for computing goods available for sale?

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the perpetual inventory system?

Feathertouch Company sold merchandize worth $800 on credit,terms n/15 and on the next day the customer returned merchandize worth $50,which cost $30 for Feathertouch company.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

Which of the following is not considered in computing net cost of purchases?

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the perpetual inventory system?